Rwanda revisits the idea of manufacturing-driven growth

A gleaming building with the words "Convention Centre" written on it, and a sort of beehive-like structure on top lit up in blue and yellow
The Kigali Convention Centre, via GovernmentZA on Flickr

The Africa at LSE blog has an interesting piece by Georges Quist about the role of manufacturing in Rwanda’s development plan.  As he notes,

This development strategy has attempted to leapfrog Rwanda from the primary sector of unprocessed agricultural production (mainly tea and coffee) to modern services – prioritising finance, insurance and real estate (FIRE) and meetings, incentives and conferences (MICE) over manufacturing. The country’s rather agnostic stance toward industrial production is salient in its twenty-year development strategy, laid out in 2000, which highlights service provision (particularly in tourism and finance) as Rwanda’s main engine for growth.

The Kigali Convention Centre, pictured above, is the cornerstone of the meetings & conferences strategy.   (I must say I can’t quite get on board with the acronyms, though — fire and mice sound like your realtor has some uncomfortable truths to tell you.)

I understand the government’s reluctance to focus on manufacturing, as its domestic market is small and its geopolitical neighborhood makes exports risky.  The country has poor relations, involving semi-regular border closures, with three of its four neighbors (DRC, Burundi, and Uganda).  Relations with Tanzania seem all right, but a rail link between Kigali and the port in Dar es Salaam won’t be operational for at least three more years, meaning that all cargo currently goes overland along poorly maintained roads.  And in general, the EAC countries aren’t doing nearly as much to facilitate regional trade integration as they ought to be.

Despite all of this, Rwanda is apparently now taking its chances with greater investment in domestic manufacturing.  As Quist writes,

Rwanda’s Domestic Market Recapturing Strategy recognises this growth model’s shortcomings, as revenue from services have not been enough to cover the country’s import purchases. To improve its finances and challenge its naysayers, the government now places more emphasis on the promotion of firms in light manufacturing (textiles and garments) and agro-processing, a diversifying of the economy the recapitalised Rwanda Development Bank is tasked with supporting.

It will be very interesting to see how this proceeds!  For more background on the subject, check out Pritish Behuria’s recent paper on Rwanda’s industrial policy as well.

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